Chesapeake Energy Corp. shareholders rejected the re-election of two directors involved in the internal probe of Chief Executive Officer Aubrey McClendon’s personal finances.
V. Burns Hargis and Richard K. Davidson, who were both on the company’s audit committee, received support of 26 percent and 27 percent of votes cast today at the annual meeting in Oklahoma City and as a result have tendered their resignations, Chesapeake said today in a statement. The board doesn’t have to accept the resignations, and says it will review them “in due course.”
The board’s audit committee hired outside counsel Locke Lord LLP earlier this year to assist in its review of loans McClendon backed with his personal stakes in company wells, along with any business those financing sources did with Chesapeake.
“Something is out of whack here at Chesapeake,” Gerald Armstrong, a Denver-based shareholder, said during an address to the annual meeting. “The absence of good governance practices has become more apparent. Accountability is what it’s all about.”
McClendon “might not be here next year,” Armstrong said.
Shareholders have criticized Chesapeake’s board for failing to rein in what they’ve seen as McClendon’s risk-taking and overspending at the company. New York City Comptroller John C. Liu, who oversees pension funds that hold less than 1 percent of Chesapeake, had called on shareholders to withhold votes from Hargis and Davidson.
Chesapeake started the day by announcing it has sold its pipeline assets to Global Infrastructure Partners in three cash transactions. Chesapeake will sell its interests in Chesapeake Midstream Partners LP to Global Infrastructure for $2 billion, the Oklahoma City-based company said in a statement. Chesapeake also will raise more than $2 billion by divesting its pipeline development unit and some central U.S. conduits to Chesapeake Midstream.
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